Some Thoughts on Strategic Sourcing

As you know, the GSA Multiple Award Schedule program and the IT GWACs (GSA, NASA and NIH) are strategic platforms that leverage the government’s acquisition resources through streamlined competitions for customer agency requirements. In essence, GSA is a federal procurement market marker. GSA is not a government-wide requirements holder. What does that mean? Well, at its best, GSA provides customer agencies and contractors with an efficient, effective government-wide framework for conducting business.

Understanding, communicating and competing requirements is the key to saving taxpayer money. As this blog has noted many times, requirements development is the “blocking and tackling” of government procurement. Sound requirements development is vital to best value outcomes. Moreover, the closer a procurement is to the actual requirements holder, the better opportunity for clear, consistent requirements with corresponding volume commitments. Again, clear, consistent requirements and volume commitments drive competition and savings.

A case in point is the GSA’s current Request for Quotes (RFQ) seeking to establish government-wide FSSI BPAs for “Janitorial and Sanitation Commodities (JanSan).” The terms of the RFQ are, at best, confusing if not troubling. The RFQ’s “Notes to Contractors” state in part that “[t]he total spend opportunity addressable through this solicitation is estimated to be more than $599 million annually.” The notes subsequently refer to an Attachment 5 for the various department and agency commitment letters. See page 2 of the RFQ. In addition the RFQ’s Attachment 6 – Participating Agencies’ Spend, lists 10 departments/agencies annual spend on janitorial and sanitation supplies.

The disparity between Attachment 5 and Attachment 6 is very instructive with regard to the role of requirements. All the commitment letters in Attachment 5, save one, are written as “conditional commitments” to use the resulting BPAs. For example, the Department of the Army’s commitment letter states in part that it will “conditionally commit to use the Federal Strategic Sourcing Initiative (FSSI) solution for our JanSan Supplies with an annual estimated spend of $1-3 million in this area.” A conditional commitment is not a commitment! Moreover, the Army’s conditional commitment of $1-3 million represents at most two percent of the Army’s $151.9 million annual JanSan spend as stated in Attachment 6 of the RFQ. Similar disparities can be seen throughout the commitment letters. The disparities, complexities and data collection costs associated with the JanSan BPAs limit competition, hurt small businesses and threaten the long term supply chain. Interestingly, the one agency that appears to make an unequivocal commitment to the JanSan FSSI BPAs is the requirements holder closest to the procurement—GSA!

The disparity between the conditional commitment amounts and total spend by potential users of the JanSan BPAs reflect the lowest common denominator approach to the JanSan BPA requirements. In order to include everyone—the BPA commits no one. In response to this analysis, a knee jerk reaction could be to attempt to make the FSSI BPAs mandatory. As I have noted previously, such an approach would be fundamentally flawed and have long term negative consequences for the competition and the supply chain—including small businesses.

The good news is that strategic sourcing can be much more competitive transparent, effective and efficient for the American people. As noted above, GSA’s MAS program is a strategic acquisition tool that provides customer agencies with the opportunity to leverage requirements through competition for agency specific BPAs. A more focused approach to strategic sourcing through the MAS program would eliminate generic, government-wide BPAs like JanSan and Maintenance, Repair and Operations (MRO) to the maximum extent practicable. Alternatively, customer agencies should establish strategic sourcing BPAs based on their specific requirements, including significant volume commitments. Specific agency requirements and volume commitments will lead to more competition, better pricing and improved efficiency. Agencies can more clearly communicate their technical requirements, buying patterns, usage rates and locations when establishing their own BPAs. In turn, contractors can strategically manage their support for the agency delivering better value outcomes and increased savings. It all boils down to executing based on sound requirements. Finally, agencies would be required to report on their savings to ensure accountability and transparency.

In sum, strategic sourcing through agency specific BPAs will increase competition, maintain the long term supply chain across the federal enterprise and increase opportunities for small businesses. It is an approach that will be a win for the American people, customer agencies and the private sector. After all, when it comes to requirements, who knows better what should go in the house than the homeowner!